A Conversation for What Constitutes a Fair Tax?
Simon Trew Started conversation Dec 5, 2001
I don't think the example given why VAT is a regressive tax makes the point very well.
VAT is a regressive tax because people on lower incomes spend a larger proportion of those incomes on items that attract VAT. So although the VAT rate is the same for everyone, the proportion of income that it takes is still higher for lower income earners.
Poll tax was, of course, the ultimate in regressive taxes because it was (with few exceptions) a flat rate tax.
National insurance is also regressive in that it is capped at 50 pounds a week.
It may also be worth mentioning that the terms "regressive" and "progressive" are not in themselves intended to be pejorative or praiseworthy.
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